6 Min Read
* HP needs credible tablet to stay relevant
* TouchPad runs Palm's webOS software
* HP strikes content deals with Amazon, Time
* WebOS coming to PCs this year (Adds details on TouchPad, webOS)
By Gabriel Madway
SAN FRANCISCO, Feb 9 (Reuters) - Hewlett-Packard Co (HPQ.N) unveiled its entrant in the tablet race, betting its "TouchPad" summer release will keep it in the running in a booming market dominated by Apple Inc's (AAPL.O) iPad and devices running Google Inc (GOOG.O) software.
The 9.7-inch tablet running off Palm's well-regarded webOS operating system is HP's gamble that there remains room for yet another mobile software platform -- a risk underscored by news that Nokia NOK1V.HE may abandon its own software in favor of Microsoft Corp's (MSFT.O) or Google's. [ID:nLDE7181GW]
HP said the TouchPad will be priced competitively against the iPad, which starts at $499. It will launch with a WiFi-only model, followed by a 3G-compatible version later in the year.
The world's largest technology company by revenue also announced new smartphones on Wednesday, the Veer and the Pre3, both also based on the webOS software that HP acquired last summer in its $1.2 billion purchase of handheld device pioneer Palm.
HP declined to provide details on wireless carrier agreements for any of its new devices.
But the company outlined a number of partnerships it has forged to bring content to webOS devices. Amazon.com (AMZN.O) will offer a free Kindle e-reader app, while Time Warner Inc's (TWX.N) Time Inc publishing arm will sell subscriptions to magazines such as Sports Illustrated and People.
While talking up the promise of the mobile Internet, executives also stressed that webOS was a platform they wanted to bring to multiple devices, including personal computers, later this year.
"We're thinking beyond today. We have a commitment to extend the webOS footprint even further as the year progresses," PC division chief Todd Bradley said.
HP said webOS will "complement" Microsoft's (MSFT.O) Windows software on PCs, rather than displace it, but declined to provide specifics.
WebOS is widely viewed as a strong platform, but HP faces an uphill battle to gain traction in the mobile market. Its products are arriving late to a market already crawling with competition from Apple and devices based on Google's Android. [ID:nN07226942]
With the traditional personal computer market maturing and prices continuing to erode, HP -- the world's largest PC maker -- needs credible offerings in the tablet and smartphone space to stay in the conversation.
The TouchPad comes as Research in Motion Ltd RIM.TO prepares to launch its PlayBook, among other competitors hoping to jump on the bandwagon.
"This product has a chance to beat RIM and any individual Android tablet, but not Apple, not this year or next. Consumers will consider the TouchPad, and then buy an iPad," said Forrester Research's Sarah Rotman Epps.
But she expects HP to give content providers more control over customer data and how they sell, putting some pressure on Apple, which is not known for its flexibility in working with media companies. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on computer sales r.reuters.com/ted77r
Graphic on smart phone OS r.reuters.com/xap64r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
As a latecomer, HP will have to spend and market aggressively to make headway in the mobile market. The company, famous for penny-pinching under former Chief Executive Officer Mark Hurd, has made it known that it plans to invest under new CEO Leo Apotheker. [ID:nN28273797]
Research group IDC expects the smartphone market to rise 25 percent this year, while industry tracker iSuppli predicts the tablet market to more than triple. In contrast, IDC expects less than 10 percent growth in the PC market this year.
HP bought Palm to bring it a differentiated software platform to deploy across a range of its products.
WebOS allows HP to offer devices with fully integrated hardware and software, a soup-to-nuts strategy that has proved wildly successful for Apple.
HP is planning to leverage its massive global footprint to sell webOS devices. It claims over 1 billion customers in 174 countries, with 88,000 retail locations.
"Our global reach is unprecedented," Bradley said, estimating the market for connected devices at roughly $160 billion and growing fast.
It will also have to make a serious effort to court the developer community. Analysts say a robust ecosystem of apps is key to success on mobile devices, and HP will need to spend time and energy enticing software makers to build for webOS.
Apple boasts more than 300,000 apps for its mobile iOS platform, while Android claims more than 100,000, so HP has its work cut out.
Shares of Palo Alto, California-based HP rose 1.66 percent to close at $48.94 on Nasdaq. (Editing by Edwin Chan, Gerald E. McCormick and Richard Chang)